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Nomura Holdings Inc’s Türkiye economist said the central bank will have to pause its interest-rate cutting at its next meeting, citing still-elevated inflation.
Zumrut Imamoglu said core inflation remains high and that the headline figure also limits room for additional rate cuts.
Annual consumer price growth barely slowed to 30.7% from 30.9% the previous month, data this week showed. Analysts had expected the rate to come just under 30%.
Nomura is the first major bank to call for a reduction in the central bank’s cutting cycle that started in July last year. In contrast, JPMorgan Chase & Co economist Fatih Akcelik still sees a 100 basis point cut in March.
The monetary authority last reduced rates by 100 basis points to 37% in January.
Imamoglu said annual inflation will rise in February because the month coincides with Ramadan, when food prices are typically higher.
Nomura now projects year-end inflation at 23%, up from its previous estimate of 21.5%. That compares with the central bank’s target of 16%.
The bank also raised its year-end policy rate estimate by 100 basis points to 29%.
“We think that food prices will ease in May-June and services inflation will be softer over the summer, allowing the Turkish central bank to increase the pace of its rate cuts,” Imamoglu said.
Monthly inflation in January accelerated to 4.8% from 0.9%, the highest in a year, due to food prices as well as other seasonal adjustments on wages and a variety of goods.
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